STATE OF MAINE

Department of Public Safety

Gambling Control Board 87 State House Station

Augusta, Maine

04333-0087 PAUL R. LEPAGE TIMOTHY S. DOYLE GOVERNOR CHAIRMAN

JOHN E. MORRIS MILTON CHAMPION COMMISSIONER EXECUTIVE DIRECTOR

Offices located at: 45 Commerce Drive, Suite 3, Augusta, Maine 04333-0087

(207) 626-3900 (Voice) (207) 287-4356 (Fax)

March 8, 2018

Governor Paul R. LePage

Office of the Governor

State House Station #1

Augusta, Maine 04333

Governor LePage,

Pursuant to 8 M.R.S.A. § 1003(2)(R), the Gambling Control Board is required to submit to you,

by March 15th of each year, a report on slot machine and table game revenues, credits disbursed

by the slot machine and table game operators, administrative expenses and the allocation of gross

slot machine and table game income for the preceding year. The attached report includes the

required information for the Hollywood Casino in Bangor and the Oxford Casino in Oxford.

The Gambling Control Board adopted this report at their meeting on 02/20/2018.

On behalf of the Gambling Control Board, I am pleased to submit the attached report to you.

Sincerely,

Milton F. Champion III

Executive Director

CC: Members of the Joint Standing Committee on Veterans and Legal Affairs

Department of Public Safety

Gambling Control Board

14th Annual Report

2018

Janet T. Mills Michael Sauschuck

Governor Commissioner Timothy S. Doyle Milton Champion Chairman Executive Director

45 Commerce Drive, Suite 3 Augusta, Maine 04333-0087

Ph: 207-626-3900

www.Maine.gov/dps/GambBoard/

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Page

INTRODUCTION

Overview 3

Gambling Control Board 3

Board Composition 3

Gambling Control Unit 4

Executive Director 5

Operations 5

Licensing 6

Auditing 6

Investigations 7

Events Shaping 2017 8

FINANCIAL STATEMENTS

Administrative Expenses 9

STATE REVENUE FUNDS COLLECTED

Slot Machine Collected Funds 10

Table Game Collected Funds 10

Fees Collected 10

ALLOCATION OF FUNDS COLLECTED

Slot Machine Activity 11

Table Game Activity 12

Total Allocation by Recipient 12

TABLE OF CONTENTS

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OVERVIEW

The State of Maine Gambling Control Board was created in 2004 within the Department of

Public Safety to carry out the functions specified in M.R.S. Title 8 Chapter 31 in response to a

citizen's initiative to allow slot machines at two locations in Maine. In November 2005

Hollywood Casino opened with slot machines only and in November of 2011, after local

approval allowed for them to add table games they began operating as a full casino in March

2012. In November of 2010, the citizens of Maine voted to allow a second casino in Oxford

County. Oxford Casino began operations as a full casino with both slots and table games in

June 2012.

GAMBLING CONTROL BOARD

The board consists of 5 members appointed by the Governor. At least 4 of the board members

must have training or experience in at least one of the following fields: corporate finance,

economics, law, accounting, law enforcement, computer science or the gambling industry. One

member must have experience in the harness racing industry. An elected official or candidate for

elective office may not serve as a board member.

Members of the board serve 3-year terms, except that the Governor shall initially appoint one

member for a term of one year, 2 members for a term of 2 years and 2 members for a term of 3

years. A vacancy is filled by appointment for the remainder of the unexpired term of that

member. Members whose terms expire serve until their successors are appointed and confirmed.

Members may serve no more than 2 full consecutive terms on the board.

Appointees must be reviewed by the joint standing committee of the Legislature having

jurisdiction over gambling matters and are subject to confirmation by the Senate. The Governor

shall appoint one of the 5 board members as chair. The member serves as chair at the pleasure of

the Governor.

BOARD COMPOSITION

Members who served on the Board in 2018 include: Tim Doyle (Chairman), Barbara Dresser,

Robert Harmon, Greg McNeal and Alfred R. Skolfield.

INTRODUCTION

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The Board meets monthly in the Board Room located at Department of Public Safety

Headquarters at 45 Commerce Drive in Augusta. The topics discussed at the meetings of the

Gambling Control Board include, but are not limited to:

• Regulating, supervising and exercising general control over the ownership and

operation of slot machines and table games, the distribution of slot machines and

table games and slot machine facilities and casinos,

• Adopt those rules the board determines necessary to administer and enforce MRS,

Title 8, chapter 31,

• Take any action as may be reasonable or appropriate to protect the public interest

and enforce chapter 31 and the rules adopted under this chapter including denial,

suspension or revocation of a license,

• Approve or disapprove terms and conditions of uniform location agreements

• Impose sanctions, penalties and costs of investigation and hearing against any

applicant or licensee for violation of chapter 31 or the rules adopted,

• Regulate, supervise and exercise general control over the operation of advance

deposit wagering in the State, and

• Review of relevant pending legislation.

The Gambling Board has also tried to hold one meeting per year alternating between the Town of

Oxford and City of Bangor in order to give the citizens of those areas the opportunity to

participate in the gambling control process. Those local meetings would be followed by a tour of

the respective casinos.

The Gambling Control Board conference room has been outfitted with an internet feed to allow

for people to listen to the meetings live through the Gambling Control Board website. We have

also set up skype for members to use accordingly and appropriately. The Board also makes that

room available for other state entities without cost.

According to Maine Revised Statute Title 8, Chapter 31, sub chapter 1, Scientific Games was

selected as a third party to operate the central site monitoring system so that all slot machines in

the state of Maine communicate electronically with that system.

GAMBLING CONTROL UNIT

The Gambling Control Unit is a bureau within the Department of Public Safety. This Unit

provides support to the Board under the direction of the Executive Director. The Unit is

responsible for the licensing, auditing and inspection of the corporations, business entities,

individuals, table games, slot machines and their associated equipment used to operate casinos in

Maine.

The Gambling Control Unit staff works diligently to ensure that the casinos are in compliance

with the statutes and rules that regulate the casino industry. They work closely with the casinos

and other members of the industry to ensure a safe gaming environment for the patrons who

choose to participate in gambling. The current positions include an executive director, 1 State

Police detective, 1 inspector supervisor, 9 civilian inspectors, 0 auditors, 1 office specialist, and 1

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office assistant. There is also 1 identification specialist position in the State Bureau of

Identification funded by the Gambling Control Board due to the large number of fingerprint

submissions that the licensing process generates. The board’s budget also funds an Assistant

Attorney General to assist with the legal work of the board.

EXECUTIVE DIRECTOR

The Executive Director, reporting to the Gambling Control Board, provides leadership,

administration and oversight of the three functional areas. Each area focuses on a different aspect

of regulation within the gaming industry. Specific responsibilities include, but are not limited to:

• Enforcement of Maine Statutes, Board Rules and Licensee System of Internal Controls,

• Individual and business licensing to include investigations of qualifications,

• Investigate any alleged violations or complaints of the Chapter, rules or internal controls,

• Collect all funds, licensing and registration fees,

• Revenue distribution,

• Over sight of the Central Monitoring System,

• Transport of gaming devices into, out of, or within the State,

• Rule development,

• Staff development,

• Budget planning, and

• Keep accurate and complete records of all areas of operation.

The Office Specialist is the assistant and administrative support to the Executive Director.

Responsibilities include but are not limited to:

• Manage office protocol as directed by the Executive Director,

• Assisting auditors and inspector operations in their needs regarding tech support and

supplies,

• Coding and processing all bills for service, contracts and amendments to service,

• Preparing agendas and recording of minutes of Board meetings, and

• Keeping the Gambling Control Board website up to date.

OPERATIONS

There are nine civilian Inspectors assigned to Hollywood and Oxford Casinos. An Inspector is

present at the casino when the casino is open to the public. The Inspectors are responsible for

random inspections using formal checklists of which an average of 32 per month were completed

and an average of 635 per month of informal observations of the gaming floor and support areas.

There were 130 self-exclusions and 299 shipments of slot machines, table games or associated

equipment into, out of, or within the State of Maine in 2018.

Additional responsibilities include, but are not limited to:

• Liaison with local, state and federal law enforcement agencies as needed,

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• Receive, remove, record and label slot machines and table games,

• Receive associated equipment, materials and/or software at the facilities,

• Adherence of Maine statutes, rules and facility internal controls,

• Administering and monitoring the self-exclusion program, and

• Being available to the public assisting as requested.

LICENSING

Licensing is processed by the Office Assistant who would ensure all initial or renewed

applications are filled out completely and all supportive documentation is recorded. The Office

Assistant would then assign the application to the Detective assigned to the Department and

assist them with the completion of background checks such as:

• Collecting fingerprint cards,

• Online reviews of:

o Corporate records,

o PACER bankruptcy records,

o Prior licensing,

o Sex offender registry, and

o Maine Revised Statute requirements.

Initial applications are sent in upon completion and can range from10 to 20 a month; Renewal

applications are submitted 6 months in advance of expiration date and can range from 30 to 70 a

month.

On an average, there are 730 employees licensed annually by the Gambling Control Board. As

well as 2 Casino Operator licenses, 7 Distributor licenses and 11 Gambling Service Vendor

licenses.

The Office Assistant works closely with inspectors invoicing the facilities with regards to the

collection of gaming equipment fees per statute and/or rule. The Office Assistant oversees the

self-exclusion and the forfeiture program of self-evicted patrons.

AUDITING

The auditor positions in the last year have undergone a re-evaluation of the day-to-day review of

operator’s financial reports and those from the central site monitoring system. Financial

information is electronically collected from the slot machines through the central site monitoring

system. This monitoring system operates 24 hours a day, 7 days a week to ensure correct

accounting of machine activity. That information is then compared to the reports from each

operator’s facility based monitoring systems to ensure the proper payment of revenue to the State

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of Maine. Any variances between operator reports and the central site monitoring system are

corrected or if they cannot, the central site monitoring system figures are used by rule. Examples

of causes of variances can be:

• Slot machine malfunction or loss of connection

• Hand Payouts

• Coin Tests

• Unclaimed, missing or Voided Ticket In/Ticket Out (TITO) Tickets

Inspectors observe the drop and count of table game activates to ensure the proper recording of

the table games revenue because there is no electronic monitoring of table games. Until a re-

evaluation is completed, other unit staff are being held responsible for safeguarding and

accounting for state revenues and allocation of funds to various accounts in accordance with

Maine Revised Statute. The statistical information for slot machine and table revenue is posted

weekly on the Gambling Control Unit website along with all other pertinent information at

https://www.maine.gov/dps/gamb-control/

INVESTIGATIONS

The majority of the State Police detective’s time is dedicated to conducting all suitability

investigations for gaming licenses. In 2018 there were 325 new license investigations conducted

along with 493 renewal license investigations that included business entities.

The detective also provides to the Maine Gambling Control Board police reports, court

documents, interview responses and any other evidence the board needs to assist in determining

the issuance or denial of a gaming license. The interview sessions sometimes require out of state

travel.

The State Police Detective also is responsible for assisting other regulatory agencies from other

jurisdictions with their suitability investigations while also being tasked with other State Police

assignments and maintaining required training. Some agencies that have been assisted are

Federal (FBI, ICE, DEA) State (State Police, MDEA) County Sheriff’s Office and local town

law enforcement.

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• Request for Proposals for the maintenance of the Central Monitoring System were submitted

and Scientific Games was awarded the contract for the next five years.

• The Financial Review RFP was re-published and as such will be awarded in 2019.

• Advance Deposit Wagering rules were adopted April 10, 2018.

• Five of eleven resolutions were passed giving the Executive Director authority, on behalf of

the Board, to complete additional day to day administrative duties.

• The Executive Director was named Department of Public Safety and the Governor’s

“Manager of the Year 2018”

Events Shaping the 2018

Gaming Season in Maine

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Expenses FY17 Expenses FY18 Difference

PERSONNEL SERVICES:

SALARIES $733,909.43 $ 724,652.26 (9,257.17)

$48,384.98 $ 55,962.70 7,577.72

$2,585.00 $ 2,200.00 (385.00)

BENEFITS $460,802.07 $ 475,924.80 15,122.73

TOTAL $1,245,681.48 $1,258,739.76 13,058.28

ALL OTHER EXPENSES:

PROF. SERVICES, NOT BY STATE $895,990.96 $ 772,433.07 (123,557.89)

PROF. SERVICES, BY STATE $177,920.97 $ 130,373.98 (47,546.99)

TRAVEL EXPENSES, IN STATE $202.30 $ 271.39 69.09

TRAVEL EXPENSES, OUT OF STATE $5,075.27 $ 6,170.64 1,095.37

RENTS $51,252.68 $ 49,361.36 (1,891.32)

REPAIRS $32.73 $ 870.00 837.27

INSURANCE $1,893.01 $ 760.41 (1,132.60)

GENERAL OPERATIONS $6,964.95 $ 12,061.51 5,096.56

EMPLOYEE TRAINING $2,140.00

(2,140.00)

TECHNOLOGY $55,004.67 $ 60,140.00 5,135.33

CLOTHING $269.20 $ 428.50 159.30

EQUIPMENT $24.99

(24.99)

OFFICE & OTHER SUPPLIES $5,639.06 $ 5,457.07 (181.99)

GRANTS TO CITIES AND TOWNS $25,000.00 $ 25,000.00

TRANSFERS $12,180.44 $ 10,653.15 (1,527.29)

TOTAL $1,239,591.23 $1,073,981.08 (165,610.15)

Total Expenses

$2,485,272.71 $2,332,720.84 ($152,551.87)

FINANCIAL STATEMENTS

Administrative Fiscal Expenses

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SLOT MACHINE COLLECTED FUNDS 2018

2017 2018 Difference

HOLLYWOOD $ 18,751,194.48 $18,077,005.08 ($674,189.40)

OXFORD $ 31,612.486.35 $35,758,070.12 $4,145,583.77

TOTAL $ 50,363,680.83 $53,835,075.20 $3,471,394.37

TABLE GAME COLLECTED FUNDS 2018

2017 2018 Difference

HOLLYWOOD $ 1,396,891.66 $1,283,959.40 ($112,932.26)

OXFORD $ 2,810,262,.67 $2,809,771.86 $ 490.81

TOTAL $ 4,207,154.33 $4,093,731.26 $ (113,423.07)

TOTAL COLLECTED FUNDS 2018 $57,928,806.46 $3,357,971.30

FEES COLLECTED 2018 $1,064,467.50

Fees include operators, vendors, individual employee, slot machines, table games

and miscellaneous fines.

STATE REVENUE FUNDS COLLECTED

CALENDAR YEAR

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SLOT MACHINE ACTIVITY

1% of the gross revenue collected from Hollywood Casino is distributed to the General Fund.

39% of the net revenue collected from Hollywood Casino is distributed by and to the following:

4% General Fund with fixed amount transferred to Gambling Addiction Services Fund

10% Fund for a Healthy Maine

1.92% University of Maine System

0.08% Maine Maritime Academy

10% Harness Racing Purse Supplements

3% Agricultural Fair Support Fund

4% Fund to Encourage Racing at Maine’s Commercial Tracks

1% Fund to Stabilize Off-Track Betting

3% Sire Stakes Fund

1% Maine Community College System

1% City of Bangor

39% Total

46% of the net revenue collected from Oxford Casino is distributed by and to the following:

25% Department of Education Grades K-12 Essential programs

3.85% University of Maine Scholarship Fund

0.15% Maine Maritime Academy

3% Maine Community College System Scholarships

4% Tribal Governments of the Penobscot and Passamaquoddy Tribes

3% Administrative Expenses of the GCB and gambling Addiction counseling services

2% Town of Oxford

1% Agricultural Fair Support

1% Harness Racing Purse Supplements

1% Sire Stakes Fund

1% Oxford County

0.5% Dairy Improvement Fund

0.5% Maine Milk Pool

46% Total

ALLOCATION OF FUNDS COLLECTED AND

DISTRIBUTED CALENDAR YEAR

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TABLE GAME ACTIVITY

16% of the net revenue collected from Hollywood Casino is distributed by and to the following:

9% General Fund and gambling addiction services

3% Administrative Expenses of the Gambling Control Board

2% Veterans Assistance Grant Fund

2% City of Bangor

16% Total

16% of the net revenue collected from Oxford Casino is distributed by and to the following:

10% Department of Education for grades K-12 essential programs

3% Administrative Expenses of the Gambling Control Board

2% Town of Oxford

1% Oxford County

16% Total

TOTAL ALLOCATION OF FUNDS BY RECIPIENT

General Fund

$ 7,705,139.25

General Fund for the Administrative Expenses of the Gambling Control Board and

for Gambling Addiction Services

$ 1,248,764.38

Gambling Control Board Other Special Revenue Account

$ 240,656.80

Department of Education for Grades K-12

$21,189,716.22

University of Maine System

$ 2,930,607.04

Maine Maritime Academy

$ 218,549.12

Maine Community College System

$ 2,695,017.12

University of Maine Scholarship Fund

$ 686,178.34

Fund to Encourage Racing at Maine's Commercial Tracks

$ 1,451,876.33

Harness Racing Purses

$ 4,407,040.20

Sire Stakes Fund

$ 1,866,256.56

Agricultural Fair Support Fund

$ 1,866,256.56

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Fund to Stabilize Off Track Betting

$ 362,969.06

Penobscot and Passamaquoddy Tribes

$ 3,109,397.44

Town of Oxford

$1,905,895.30

City of Bangor

$ 523,864.25

Oxford County

$ 953,147.55

Healthy Maine Fund

$ 3,629,687.88

Dairy Improvement fund

$ 388,674.66

Milk Pool

$ 388,674.66

Veterans' Assistance

$ 160,437.74

TOTAL ALL ALLOCATIONS

$57,928,806.46